Wage Hour And Overtime Law: Must Employers Pay For Cell Phones?

Most employers would not be happy if their employees did not have cell phones, yet few employers offer to pay for their employees’ cell phone. In Cochran v. Schwan’s Home Services, Inc. the California Court of Appeals examined whether, under federal wage, hour, and overtime law, an employer is required to reimburse an employee for the expense of mandatory use of a personal cell phone for work purposes, or whether an employer is only required to reimburse the employee for expenses he or she would not have otherwise incurred absent the job. The court held that a partial reimbursement is always required.

The Case

The plaintiff in this case filed an action on behalf of himself and all other customer service managers who were not reimbursed for expenses related to the work use of their personal cell phones. The California Court of Appeal decided these employees must be reimbursed a reasonable portion of their cell phone bills for work-related use.

The Court’s Decision

The court relied on Section § 2802 of the Fair Labor Standards Act (FLSA), which provides in relevant part that “[a]n employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties…”. The court reasoned that the purpose of this statute was to prevent employers from passing on their business operating expenses to their employees.

The employer argued it had no duty to reimburse its employees because many of them had unlimited cell phone plans and did not in fact incur expenses due to work-related phone calls. Moreover, the employer reasoned that many employees did not pay for their own cell phone. Rather, third parties, such as family members, paid for the employee’s cell phone. The Court of Appeals, however, was unpersuaded by these arguments, reasoning that the real issue was whether the employer should be required to reimburse the expense. The court held that to show an employer is liable under Section 2802, “[a]n employee need only show that he or she was required to use a personal cell phone to make work-related calls, and he or she was not reimbursed”.

The Court of Appeals’ decision is straightforward: employers must reimburse a reasonable percentage of an employee’s cell phone bill if the employee is required to use his or her cell phone for work purposes. The Court of Appeals, however, found the issue of damages was more complicated. Rather than decide this issue, it remanded the case to the trial court to review how damages might be proven.

Future Implications

Courts in Ohio and in many other jurisdictions have not addressed this issue. If, however, these courts adopt the holding in Cochran v. Schwan’s Home Services, Inc., many employers will be affected. In today’s society, most employers allow employees to use their own personal cell phone for work purposes.

This ruling will affect the vast majority of employers in California, and elsewhere if it is adopted by other courts. Most employers allow employees to use their own personal cell phones for work purposes. Some employers have Bring Your Own Device (BYOD) policies due to perceived productivity gains and cost savings. If you have questions about your employer’s obligation to reimburse you for required use of cell phones, contact an experienced wage, hour, and overtime law attorney to discuss your rights.